31 SNAP recipients to be disqualified for misuse of EBT cards during outage

Thirty-one people who receive food benefits via Louisiana's Supplemental Nutrition Assistance Program will be disqualified after they allegedly attempted to overspend during an October 2013 outage, officials with the Louisiana Department of Children and Family Services said Monday.

The Louisiana Department of Children and Family Services announced Wednesday that it will seek to disqualify Supplemental Nutrition Assistance Program recipients suspected of intentionally using their EBT cards to make purchases that exceeded their limit during the outage due to a computer system failure in October.

Louisiana taxpayers won't be on the hook for a decision by some Louisiana retailers who allowed holders of government "electronic benefit transfer" cards to make unlimited purchases, even though they could not check card balances.

Officials said a system failure by Xerox in October disabled the EBT system in Louisiana and other states. The failure essentially erased any spending limits on many beneficiaries' EBT cards for a period of time.

As a result of the outage, the DCFS Fraud and Recovery Unit received details of approximately 12,000 insufficient funds transactions conducted while the system was down. The DCFS said no unauthorized taxpayer dollars were used during the outage, and the retailers are responsible for the cost of any non-sufficient funds transactions.

Monday, officials said six SNAP recipients were disqualified from benefits after they attempted to intentionally and grossly misuse taxpayer dollars by using their EBT cards to make purchases that exceeded the available balance during the multi-state system failure last year. Officials with the DCFS said 25 additional recipients are in the process of being disqualified.

"Our investigations and disqualification process have been thorough and methodical to ensure that the abusers are properly disqualified," said DCFS Secretary Suzy Sonnier. "This is a unique type of fraud compared to the cases we usually encounter."

DCFS' Fraud and Recovery Unit investigated the 500 most egregious transgressors, who attempted to spend $315,386 that they did not have available in benefits.

Those transactions ranged from $300 - $2,000. The agency sent letters and questionnaires to those 500 users and received 113 responses and scheduled 109 interviews.

"Responses to the disqualification letters have ranged from admitting to committing the fraudulent transactions, to declaring no knowledge of the transactions, and to stating that the retailer told the clients it was 'OK' to perform the transaction because 'the government was shut down,'" said Sonnier. "Regardless of circumstances, knowingly attempting to spend more than the balance on your card or allowing others to do so is grounds for disqualification."

Based on the returned questionnaires and evidence collected by DCFS, investigators have initiated the process to terminate benefits for 31 clients through an Administrative Disqualification Hearing.

Six violators chose to waive their right to a hearing and will be disqualified beginning March 1.

"The investigation and disqualification process is ongoing and we expect it to result in additional disqualifications," said Sonnier.

Federal guidelines state that a first-time violation will result in a 12-month disqualification from the SNAP program. A second offense will result in being disqualified for 24 months. Third offenses will result in a permanent disqualification from the SNAP program.

Louisiana State Police, the Louisiana Attorney General and all of the state's district attorneys have been notified to investigate if any criminal laws were violated.

"Several district attorneys have requested more specific information in order to potentially initiate criminal investigations in their jurisdictions," said Sonnier. "DCFS has provided that data and will continue to assist all state and local law enforcement officials who are standing with us as we attack fraud within public assistance programs."

Under RS 14:68.2.1, DCFS employees, owners, employees or operators of retailers that accept SNAP, and adult household members of SNAP recipients are subject to up to $5,000 in fines for failing to report known unauthorized use of SNAP benefits.

Additionally, under RS 14:68.2, those convicted of unauthorized use of SNAP benefits face penalties ranging from $5,000 and/or six months in prison to one million dollars and/or imprisonment of up to 10 years.

LOUISIANA'S SOCIAL SERVICES DEPARTMENT HAS STRIPPED FOOD STAMP BENEFITS FROM SIX PEOPLE WHO DELIBERATELY OVERSPENT THEIR MONTHLY BENEFITS DURING AN OUTAGE IN OCTOBER. IT'S ALSO WORKING TO DISQUALIFY ANOTHER 25 FOOD STAMP RECIPIENTS. ON OCTOBER 12TH.. SEVERAL LOUISIANA RETAILERS ALLOWED FOOD STAMP RECIPIENTS TO MAKE UNLIMITED PURCHASES WHEN THE ELECTRONIC CARD SYSTEM WAS DOWN.. AND BALANCES COULDN'T BE CHECKED. THE DEPARTMENT SAYS IT IS PURSUING 500 PEOPLE WHO MISSPENT 315- THOUSAND DOLLARS.

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